Why cash flow training is important for your employees

What you’ll learn

  • Learn the purpose and benefits of cash flow training and forecasting.
  • Learn how using cash flow training helps in better treasury management.
  • Understand how cash flow analysis impacts a company’s ability to grow.

Two key characteristics of a healthy organization are having healthy cash flow and hard-working employees. Although cash flow is a matter of treasury and finance and employee performance is a matter of human resources, they are undoubtedly dependent on each other. Unfortunately, employees outside of the finance and treasury department cannot make the connection. It’s the responsibility of the finance leader to educate and train their employees about how company cash flow affects them and vice versa.

What is the purpose of cash flow training?

Cash flow training is vital for companies to monitor their liquidity at multiple durations, improve their cash flow, and generate long-term profits. It also helps business owners, managers, and employees manage their cash flow and outlines the process of preparing cash flow forecasts. Implementing the best cash flow management technique instantly addresses any shortfalls and sets up companies for future strategic growth.

What are the benefits of employees learning about company cash flow?

Employees are the ‘frontline workers’ when it comes to keeping the business running smoothly. So, training them on company cash flow leads them to:

  • Better perform in their roles by understanding their impact on cash flow.
  • Track KPIs to monitor and improve processes for effective cash flow management.
  • Engage in actual operational economics and not in conceptual ideas.

The importance of cash flow training for a business

Cash flow training helps determine the net change in your company’s cash position. With proper training on cash flow, a company can :

  • Keep up with debt: Companies usually have long-term loans and short-term credit accounts with vendors. The necessity to make these payments continuously binds the free cash flow, which is the money available to grow and expand the business. With proper cash flow training, companies can avoid debt by understanding shortages in cash and borrowing proactively.
  • Gain investment opportunities: Solid cash flow provides opportunities to invest in growth. Investing in research and development, renovating infrastructure, improving technology, providing more training, and buying more assets and inventories are ways to grow a business with positive cash flow.
  • Manage cash flows: With scenario planning, employees can identify ranges of possible outcomes and impacts, evaluate reactions, and manage both favorable and unfavorable opportunities. By visualizing risks and opportunities, businesses can become more proactive and strategic rather than reactive.

How to incorporate training into the company culture

Training is an investment that helps companies ensure that their employees have the right skill set to be most productive and strategic in their job and role. Incorporating training into company culture can be done by:

  • Communicating for the future and not for the past.
  • Getting managers involved with training employees.
  • Allowing development days: allow employees to attend seminars, webinars, or conferences.
  • Encouraging employees to convey departmental financial results at meetings.
  • Keeping training casual, fun, and entertaining.
  • Teaching small portions or one main idea at each company meeting.

Incorporating cash flow training into company culture leads to:

  • Engaging performance
  • Strategic decision making
  • Professional atmosphere
  • Collaboration
  • Clarity In terms of structure and communication

Benefits of incorporating a strong company culture

A strong company culture leads to:

  • Customer satisfaction: A profitable company is a company with satisfied customers.
  • Steady growth and development: Employees who are confident in their company’s products and services tend to work harder and perform better.
  • Revenue gains: Revenue gets impacted by corporate culture. Customers can sense when an organization operates in harmony. With domain knowledge, a company can give more information and solutions to help their customers, leading to revenue growth.
  • Better decision-making: A well-visioned mission and corporate values support employees’ capability to produce strategic and productive decisions. It provides them a framework for responses to questions they may have as they advance through the decision-making process, aligned with company goals.
  • Better employee retention: Retention of a positive and highly motivated employee is essential for the success of an organization. High employee turnover increases expenses and also harms the organization’s confidence.

Types of cash flow training to give employees

Motivating employees to develop and learn new skills and techniques with diverse training eventually makes the business more creative and progressive. The types of cash flow training a company can provide to its employees are:

1. Cash flows from operations: Cash flow from operations refers to money flows directly related to the production and sale of goods. The ability of a company to generate enough cash flow to maintain and expand operations is determined by operating cash flow. It can also indicate when a company requires outside capital for expansion.

2. Cash flows from investing: Investing cash flow reports show how much money has been generated or spent due to investment activities. Negative cash flow could result from significant cash being invested in the company’s long-term health, such as research and development.

3. Cash flows from financing: Financing activities give investors information about a company’s financial strength. Transactions involving the issuance of debt, equity, and the payment of dividends are examples of financing activities. They are also used to assess how well the board of directors manages the company’s capital structure.

Benefits companies get from cash flow training

Cash flow training helps a company determine its current state of health and lays the groundwork for future investment activities. If a company’s money is tied up with other assets, such as assets that can’t be sold easily, or are costly, it may leave the company with very little available cash for investing. Cash flow statements help a company measure its liquidity effectively.

Benefits employees get from cash flow training

From cash flow training, employees:

  • Improve plans and decisions
  • Recognize where the money Is spent
  • Protect and expand business relationships at the right time

What a positive cash flow means for employees

Employees want to know the company’s honest financial health, including advanced cash flow analysis. A positive cash flow leads employees towards:

  • Honesty towards their performance and work
  • Trust, confidence, and continued employment
  • Commitment towards the team and organization

Effects of a business’ negative cash flow

Negative cash flow means that a business is operating with a cash deficit. The success of your business is often tied to your ability to maintain healthy cash flow. When a company works with a negative cash flow, it must meet its debts and expenses through other means such as drawing from cash reserves. Eventually, all-cash reserves get exhausted if the company continues to function the same. Companies that cannot collect overdue invoices and reconcile A/R see negative cash flow. When customers pay late, it affects the ability to pay debts and operate the business efficiently, and it also affects the ability to get a business loan in the future.

Advanced cash flow analysis also impacts a company’s ability to grow. Positive cash flow provides more capital to spend on expenditures with the freedom to reinvest. On the contrary, negative cash flow forces companies to exhaust cash reserves on payables instead of growing the business.

Support cash flow training with Artificial Intelligence

In any company and organization, its financial health depends on how employees understand cash flow and its purposes. Employees should know that cash flow training is most important for building the strength of the organization they are working in. Today, the other key dependency is leveraging AI-based technology that can automatically simplify and enhance cash flow performance.

Learn more about HighRadius’s AI-enabled Cash Forecasting Software for a more Intelligent Treasury powered by the Rivana Artificial Intelligence platform.

Schedule a demo to learn how cash flow training and advanced cash flow analysis can help a company and its employees focus on adding value to the treasury, maximizing growth, and making a business more resilient.

There's no time like the present

Get a Demo of Integrated Receivables Platform for Your Business

Request a Demo
Request Demo Character Man

HighRadius Integrated Receivables Software Platform is the world's only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Integrated Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway - covering the entire gamut of credit-to-cash.